‘Wrong head count robs city of £2.4m’

Oct 18 2007 by Adrian Pearson, The Journal

GOVERNMENT spending chiefs could short-change Newcastle Council by more than £2.4m as they continue to use outdated population figures, it was said last night.

Despite a rise in the number of people living in the city, the Government is refusing to use updated statistics which show an extra 4,300 residents.

And with an operating budget of more than £152m, Newcastle Council is missing out on £10 for every one of the 270,500 people living in the city.

This is because the Government is using Office for National Statistics predictions based on the years up to 2004, which show a declining population. Councillors insist the Government should be using revised ONS estimates which reveal the 2006 population as the higher 270,500 figure.

If they cannot convince the Department of Communities and Local Government to add the extra 4,300 residents, they face an initial shortfall of at least £2.4m. The council is now preparing to lobby the Government with a simple message: “Give us our money.”

Liberal Democrat leader John Shipley said it was important the council was treated fairly.

“It is obviously wrong for population figures to be used which are already inaccurate and yet the Government is about to set spending figures based on these and as a council we suffer. If the figures are not changed, Newcastle will lose out.

“I’m hopeful that the case we are making will be successful and we will do all we can to make sure we are treated fairly. Because these figures are bad now, but they will go on getting worse as our population continues to grow, against original expectations.”

If the council was awarded the cash, the final figure could be cut to £900,000 as various spending rules are taken into account. Coun Shipley faces a tough task. The government department insists it used the best data. A spokesman said: “The spending review announced earlier this week provides a fair and affordable settlement for local government in a tight spending round, providing a real terms increase in core grant resources of 1% per year over the next three years.

“Councils will also receive further investment through area based and specific funding which will be announced by the end of the year.

“This builds on the 39% real terms increase in local government funding since 1997 with, for example, significant additional specific grants for social care of £14bn.

“The Government believes that there is no excuse for excessive council tax rises or a reduction in the quality of services.”

The Government’s population figures are thought to be accurate for other North-East councils, although the problem is repeated at “core cities” across the UK.

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How the figures went wrong three years ago

THE population figures at the centre of the funding row were both created by the Office for National Statistics.

The lower figure was set at the end of 2004, when the ONS looked at the sliding figures and assumed Newcastle’s population would continue to fall.

But within a year these figures were already wrong by more than 2,000.

This was discovered when the ONS produced a more accurate look at actual populations.

The latest estimates show Newcastle growing. And by next year, the difference between the original lower estimate and the actual figure could be more than 8,500.

With this discrepancy the council could be forced to raise tax to meet a budget shortfall of more than £2.4m

This figure would be less if the money was awarded, as better funded councils in effect subsidise other authorities.